The Importance of Product Life Cycle in Media Planning

by Fred Victor

A company’s product life cycle (PLC) has a significant impact on decisions making when it comes to media planning as managers will make different marketing decisions at each stage in a product's life, for instance, from the beginning with the need to generate awareness for a new product, then ending with the ability to maintain that awareness.

Incorporating PLC in media planning is an essential task that must be continually undertaken. The competitive business environment is undeniable, like shifting market conditions, including the ever-changing customer needs and wants, almost always ensure that what worked in the past will not work in the future, hence requiring media planning revisions in how a product is marketed.

New Product Entry Points

When a new product is introduced, the challenge will be the effort to generate awareness for that product. At this very early stage of market introduction, the use of traditional print and broadcast media is a proven way to create awareness and ultimately demand.

Establishing the Preference

As soon as a product has public awareness, marketers begin creating product preferences among target customers. Establishing that preference over other available offerings requires telling the product's story through selected media channels. For instance, mass media can be considered including social media as it allows more information to be shared virally.

Competing in a Crowd

Often, this occurs during a product's mid-life stage where marketers begin to rely on word-of-mouth (WOM) generated through satisfied customers as well as the third-party endorsements such as celebrity endorsements.

Maintaining the Awareness

Once a product is established e.g. Secret Recipe, AirAsia etc., the advertiser's challenge is to maintain that public awareness. At this stage, mass media platform becomes important in maintaining a general level of awareness for a product where it also raises awareness among new market entrants.

Starting Over

A product or service will eventually reach a point of diminishing returns; media use declines when this happens, provided the marketers are able to introduce a brand extension or a completely new product. Of course, the life cycle starts all over again.

In other words, at every stage in a product's or service’s life cycle, marketers will critically consider the choices related to generating public awareness, customer preference, demand, and ultimately the purchase decisions. 

Advertisement is an Investment, Not Expenditure – Marketing Channel

by Fred Victor

Well, it’s a million dollar question particularly for those conservative-cum-old fashion business owners or managers. Often, advertisement is considered as expenditure. Some broiling questions like “How much we need to spend”, “Can we spend less than 3% based on total projected sales?” and other concerning matters that have put them in advertising dilemma.

In todays’ heavily brand-driven business environment, advertising budget should be considered as part of a brand investment rather than considering it as expenditure. In fact, such investment helps developing and strengthening your brand in short- and long-term, if it’s advertised (or invested) effectively.

So, isn’t it “unfortunate” to consider advertising as expenditure, but not investment? Let’s dissect the issue a bit further.

First, should advertising investment be considered as advertising expenditure/cost (like any other costs, fixed or variables) is to be passed on to the consumer? Or, should advertisement be considered as an investment by your company (for a brand) which helps increasing your brand strengths, sales and market share eventually, resulting in economies of scale which either reduces the overall cost of investment or increases the brand values to your customers, partners, shareholders and employees.

An unfortunate Pricing Example:

Product cost = Cost of Goods Sold + Direct/Indirect Costs + Manufacturing Costs + Advertising Costs

Frankly, it’s weird that advertising cost is taken into account in determining a product’s price. As a general rule of thumb, pricing methodology covers both direct/indirect cost and manufacturing costs. Advertising investment should not be included as the “returns” – brand contributions (ensued from advertisement) are expected to provide surplus (or incremental sales) towards covering direct/indirect costs.

Having said that, advertising investment is not a cost in the same manner as fixed or variable costs or any other attributable overheads, but measured as a long-term investment in your brand on which the brand must generate “returns”.

In sum, “returns” should be a matter to deal with when it comes to investment in advertisements. It’s all about the potential returns from the (advertisement) investment, where (a) brands strengths (ensued from brand exposure), (b) sales (ensued from product/brand exposure), and (c) market share (ensued from product exposure) are factors that to be achieved.

As far as advertisement is concerned, expenditure ... is irrelevant!